Wellstar estimates N.D. reserves at 6.4 million bbl P+P
2013-03-13 08:34 ET - News Release
Mr. Andrew Rees reports
WELLSTAR ENERGY CORP. ANNOUNCES NI 51-101 COMPLIANT REPORT ON TARGET OIL & GAS RESERVES WITH A $177 MILLION NPV10 AND 9.98 MILLION BARRELS OF OIL
Netherland, Sewell & Associates Inc., a qualified reserves evaluator, has prepared a National Instrument 51-101-compliant report dated Jan. 24, 2013, and prepared as of Oct. 31, 2012, estimating reserves and future net revenues for certain of Wellstar Energy Corp.'s non-operated oil and gas properties consisting of approximately 18,271 gross (7,273 net) contiguous acres in Dunn county, North Dakota.
Further to the company's press releases of Oct. 24, 2012, and Feb. 22, 2013, the company has entered into a purchase and sale agreement relating to the acquisition of an interest in the assets. Closing of the acquisition is subject to, among other things, the company securing satisfactory financing and obtaining approval of the TSX Venture Exchange, including review of a title opinion with respect to the assets. There can be no assurance that the acquisition will be completed as proposed or at all and trading in the company's shares should be considered highly speculative.
The report has been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and assuming development of the assets in respect of which the estimate is made will occur, without regard to the likely availability to the company of financing required for such development.
The report estimates, as of Oct. 31, 2012, the company's total proven reserves (P1) at 2,112.1 Mbbl (thousand barrels) and 761.5 million cubic feet) with future net revenues of $49.0-million (U.S.) before income tax (net of all drilling and completion costs), discounted at 10 per cent annually. In addition, the report indicated probable reserves (P2) of 4,348.5 Mbbl and 1,200.6 million cubic feet with future net revenue of $71.64-million (U.S.) net to the company, discounted at 10 per cent annually. The company's possible reserves (P3) for the assets are estimated to be 3,516.8 Mbbl and 996.8 million cubic feet with future net revenue of $56.55-million (U.S.), discounted at 10 per cent annually. In summary, the report indicates total recoverable reserves (PI, P2 and P3) of 9,977.4 Mbbl and 2,958.9 million cubic feet with future net revenue of $177.2-million (U.S.) net to the company, discounted at 10 per cent annually.
The estimated net reserves of the assets and future net revenues before income tax (net of drilling and completion costs) to the company (assuming completion of the acquisition) based on the P1, P2 and P3 assumptions are highlighted in the table.
Reserves Future net revenue before income taxes (millions US$) Light/medium oil Gas Discount rate (Mbbl) (MMcf) Category Gross Net Gross Net 0% 5% 10% 15%Proved developed producing 1,005.3 804.0 480.2 384.1 58.98 36.93 27.04 21.57Proved undeveloped 1635.2 1,308.2 471.7 377.4 67.62 37.33 21.97 13.10Total proved 2,640.5 2,112.1 951.9 761.5 126.59 74.26 49.00 34.67Probable 5,419.7 4,348.5 1,497.0 1,200.6 239.36 125.10 71.64 42.48Proved plus probable 8,060.2 6,460.7 2,448.9 1,962.1 365.96 199.36 120.64 77.14Possible 4,374.2 3,516.8 1,240.8 996.8 217.32 102.64 56.55 33.55Proved plus probable plus possible 12,434.4 9,977.4 3,689.7 2,958.9 583.28 302.00 177.20 110.69
The reserves shown are estimates only and should not be construed as exact quantities. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable; probable reserves are those additional reserves which are less certain to be recovered than proved reserves. Possible reserves are those additional reserves which are less certain to be recovered than probable reserves. There is a 10-per-cent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Wellstar's president, Andrew H. Rees, stated: "We are very pleased to be able announce the net present value (NPV) of the company's proposed acquisition assets as presented by Netherland Sewell. With a NPV of reserves at a 10-per-cent discount rate of approximately $177-million (U.S.), management feels the market will now have the information necessary to value the company and build comparables to its peers."
A complete copy of the report can be found on the company's website.
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